Open Journal of Business and Management, 2016, 4, 675-685 http://www.scirp.org/journal/ojbm ISSN Online: 2329-3292 ISSN Print: 2329-3284 Research on Support Capacity of China s Social Endowment Insurance by the Central and Local Governments Analysis on the Statistic from 2009 to 2014 Tongbo Deng School of Public Management, Jinan University, Guangzhou, China How to cite this paper: Deng, T.B. (2016) Research on Support Capacity of China s Social Endowment Insurance by the Central and Local Governments Analysis on the Statistic from 2009 to 2014. Open Journal of Business and Management, 4, 675-685. http://dx.doi.org/10.4236/ojbm.2016.44067 Received: August 18, 2016 Accepted: September 6, 2016 Published: September 9, 2016 Copyright 2016 by author and Scientific Research Publishing Inc. This work is licensed under the Creative Commons Attribution International License (CC BY 4.0). http://creativecommons.org/licenses/by/4.0/ Open Access Abstract On the basis of the guidance on Implementation of the new type of rural social endowment insurance, the paper uses the statistic about and population from 2009 to 2014 to analyze the new social endowment share of security by central and local government, and the proportion in that year. Result shows that central and local government can afford the demand of new rural social endowment insurance. China is able to support the new rural social endowment insurance. Keywords New Rural Social Endowment Insurance, Security, Central Government, Local Government 1. Introduction Endowment security is the most important part of the social security. Establishing and improving rural social endowment institution play an important role in rural social security system. In September 2009, the state council enacted the guidance on Implementation of the new type of rural social endowment insurance (the paper will call it the guidance in the following). China begins with the experiments of new rural endowment insurance. Compared with old rural endowment insurance, the most brightness of the new one is that government would offer subsidy for rural endowment insurance. The guidance stipulates that the payment contribution of new rural endowment insurance is composed of individual, collectivity and government [1]. Government subsidy is a significant part in the new rural endowment insurance foundation. It DOI: 10.4236/ojbm.2016.44067 September 9, 2016
shows that the country should take economic responsibility on construction of rural social endowment insurance institution. Governments provide the new rural endowment insurance sufficient investment. It s meaningful to accelerate contribution of the new rural endowment insurance and realizing full coverage of whole country for establishing the system. However, it demands that the government expands its input to cover this objective. Moreover, accountability and affordability of central and local government are the matter to realize full coverage of the nation in advance. Therefore, the paper measured the burden of the new rural endowment insurance between 2009 and 2014. According to the results, the following will evaluate availability of finance on the new rural endowment insurance by the central and local government. 2. New Subsidy Policy Will Follow Multiple Funding The new rural endowment insurance is a basic institution for elderly security. This insurance s central role is diversification of endowment risk, and meeting demands of rural elderly. In essence, new rural endowment insurance demonstrates critical and general attributes of social security, which is not only an insurance, but also welfare for rural residents. It is significant component of public endowment security system. What s more, it belongs to basis public service system. Based on the theory of fiscal decentralization, the local governments should supply public services and other things related to people s welfare for residents. In contrast with central government, the local governments are advantage at information, administration cost and preference [2]. Therefore, it is normal in public economics that local governments are responsible for local public services and products, while central government offers nation s public services and products. The way of solving problem of providing for the elderly in particular rural areas by the new rural endowment insurance is pensioned people. So it s responsible for local governments to provide endowment security. Nevertheless, that does not mean local government need to financing by themselves. Because of differentiate in factors of production, natural conditions and public services cost in diverse areas, there are big gaps of payment ability among local governments. The central government bridge gaps through supplying grant-in-aid scheme. In theoretical, central government s grant-in-aid scheme needs to achieve three goals solving spatial externality of local government; correcting allocation error of ; realizing equalization of public services [3]. In order to establish the institution of new rural endowment insurance, the guidance instructs the central and local governments to invest more in subsidizing the entry payment as well as the pension repayment. The implement is following multiple funding referencing to subsidy theory. Fiscal subsidies policy of the new rural endowment insurance is shown in Table 1. The central government is financing and subsidizing the pension repayment. The guidance rules governments pay basis pension for the insured qualified [4]. The central administration supplies full subsidization for Midwest area according to basic pension standard, and grants 50 percent for eastern area. The central government subsidizes every 676
Table 1. Fiscal subsidy situation of the new rural endowment insurance. Part Subsidy object Central government Local government General payment group No subsidy Subsidy ( 30 yuan per person per year) Entry payment Endowment insurance individual account of rural insured High-level payment group Disadvantaged payment group No subsidy No subsidy Subsidy ( 30 yuan per person per year + praise appropriately) Subsidy ( 30 yuan per person per year + 100 yuan per person per year partly or fully) Pension repayment Minimum criteria of basic pension (55 yuan per person per year) Midwestern area Subsidize 100% No subsidy Eastern area Subsidize 50% Subsidize 50% Offer more basic pension No subsidy Subsidize 100% Data source: the guidance on Implementation of the new type of rural social endowment insurance (National Development and Reform Commission [2009] 32 article). resident 55 yuan every month. We called it minimum basic pension which is minimum subsistence allowances ruled by central government. According to the documents, we can indicate that the minimum basic pension for every resident is 660 yuan every year. Central and west areas can get full subsidization. In east area, central government provides each person 330 yuan each year. Local governments subsidizing system divides in two parts the entry payment and the pension repayment. First is the entry payment. On the basis of The guidance, local government subsidies individual expenses to encourage rural residents to participate in the insurance. Specifically, there are three policies. Firstly, subsidy standard for rural residents is not lower than 30 yuan per person per year. Exact amount of allowance is based on local governments conditions. Secondly, in order to stimulate participants more payment, local governments follow the principle of pay more, subsidize more. Encouraging insured people to choose high-level payment insurance by praising them appropriately [5]. The specific scales and measures shall be prescribed by Provincial people s governments. Thirdly, with regard to disadvantaged groups such as severe disabled rural residents, local governments would pay all or part of minimum insurance premiums for them. All these subsidies would put into individual account of insured rural residents, which is to be the basic account for providing individual pension in the future. Second is the pension repayment. To be specific, we can split up the rules into three parts. Firstly, regarding to the minimum basic pension standard (55 yuan per person per month), governments in east area would pay 50 percent of the assistance funds, while Midwestern area governments with no need for grant arrangement because of full subsidization of central government. Secondly, on account of differences in levels of economics development and consumption, local governments can enhance basic pension criteria according to its situation. Thirdly, for the sake of encouraging insured residents to pay stably, local governments would offer more basic pension appropriately for the people who have paid for more than a given year. It is ruled by local people s governments as well. 677
3. Calculation and Analysis of Subsidy Amount of the New Rural Endowment Insurance According to relevant regulations of state, there are 11 provincial administrative regions belong to China s eastern area. They are Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan province. Midland includes 8 provincial administrative regions. They are Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei and Hunan province. There are 12 provincial administrative regions in western area. They are Sichuan, Chongqing, Guizhou, Yunnan, Xizang, Shanxi, Gansu, Qinghai, Ningxia, Xinjiang, Guangxi and Inner Mongolia province. Hong Kong, Macao and Taiwan provinces are special administrative regions highly disciplined. So they don t belong to eastern or western areas temporary. We will calculate the amount of subsidy of the new rural endowment insurance based on population and data of the state. This paper uses the data from 2009 to 2014. 3.1. Calculation and Analysis of Subsidy Amount of Central Government On the basis of National Development and Reform Commission [2009] 32 article, central government covers full subsidization of 55 yuan per person per year for central and western areas, while of 50% for eastern area. Elderly people over 60 years old without basic endowment insurance for urban employees can draw a pension. If the old over 60-year-old without basic endowment insurance for urban employees can get a pension in implementing new rural endowment insurance, their children are eligible for insurance should pay for the insurance. This paper will calculate subsidy amount of central government in the situation of full coverage of eligible rural residents. The rural elderly number of the country in the late of the year from 2009 to 2014 shown in Table 2. According to regulations, the relief amount (central government provide for the eastern area) = population of the rural residents over 60-year-old in eastern regions 55 50% 12. The relief amount (central government provide for the central and western area) = population of the rural residents over 60-year-old in central and western regions 55 12, we can calculate the specific amount of central government fiscal subsidy all over a year. Our central government s income was 359.1571 million yuan in 2009, and up to 644.9345 million yuan in 2014, shown in Table 3. In 2014, subsidy amount of the new rural endowment insurance accounts for 0.72 percent of income of central government. The share of our central government income takes 46 percent of total income, while central government expenditure accounts for total expenditure 15 percent. That s why the conclusion is that central government can afford the subsidy expenditure for the new rural endowment insurance. 3.2. Calculation and Analysis of Subsidy Amount of Local Government According to the National Development and Reform Commission [2009] 32 article, the 678
Table 2. Calculation and analysis of subsidy amount of the new rural endowment insurance between 2009 and 2014. Year 2009 2010 2011 Nation 7997 263.89 7986 263.55 8076 266.50 Eastern 2620 86.47 2584 85.26 2621 86.48 Beijing 25 0.83 26 0.85 27 0.89 Tianjin 36 1.19 36 1.19 37 1.22 Hebei 437 14.43 453 14.95 463 15.27 Liaoning 196 6.46 193 6.39 190 6.28 Shanghai 30 0.98 30 0.98 31 1.04 Jiangsu 519 17.13 474 15.63 472 15.56 Zhejiang 226 7.45 219 7.22 224 7.38 Fujian 155 5.1 154 5.07 157 5.19 Shandong 657 21.69 662 21.85 668 22.04 Guangdong 297 9.81 294 9.7 307 10.13 Hainan 42 1.4 43 1.43 45 1.48 Midwestern 5430 179.17 5407 178.46 5437 179.47 Shanxi 166 5.47 172 5.67 174 5.76 Jilin 138 4.55 142 4.69 147 4.86 Heilongjiang 167 5.51 172 5.67 175 5.78 Anhui 473 15.62 463 15.27 462 15.25 Jiangxi 280 9.25 285 9.42 288 9.51 Henan 662 21.84 665 21.95 664 21.91 Hubei 361 11.91 345 11.39 343 11.33 Hunan 486 16.03 508 16.78 509 16.79 Neimenggu 109 3.59 108 3.56 110 3.62 Guangxi 352 11.61 338 11.15 341 11.26 Chongqing 237 7.82 236 7.79 234 7.72 Sichuan 830 27.4 811 26.76 808 26.66 Guizhou 298 9.84 284 9.36 287 9.47 Yunnan 291 9.59 298 9.85 302 9.98 Xizang 13 0.43 14 0.46 15 0.5 Shanxi 244 8.05 241 7.95 242 8 Gansu 174 5.75 176 5.82 180 5.95 Qinghai 27 0.89 27 0.89 28 0.91 Ningxia 28 0.91 28 0.93 29 0.94 Xinjiang 94 3.11 94 3.1 99 3.27 679
Continued Year 2012 2013 2014 Nation 8156 269.15 8248 272.18 8420 464 Eastern 2646 87.28 2677 88.36 2763 91 Beijing 29 0.95 31 1.01 31 1.02 Tianjin 38 1.24 39 1.29 41 1.34 Hebei 471 15.54 477 15.75 484 15.97 Liaoning 188 6.2 190 6.26 227 7.49 Shanghai 33 1.08 33 1.1 30 1.00 Jiangsu 471 15.54 469 15.49 450 14.86 Zhejiang 227 7.49 231 7.62 238 7.84 Fujian 159 5.24 161 5.32 147 4.87 Shandong 669 22.09 672 22.18 695 22.92 Guangdong 315 10.39 327 10.78 377 12.45 Hainan 46 1.52 47 1.56 44 1.44 Midwestern 5465 180.4 5530 182.52 5657 373 Shanxi 177 5.84 180 5.94 187 12.37 Jilin 151 5 155 5.11 163 10.76 Heilongjiang 180 5.95 185 6.1 191 12.63 Anhui 462 15.26 466 15.39 449 29.66 Jiangxi 289 9.54 292 9.64 298 19.70 Henan 666 21.98 672 22.17 644 42.52 Hubei 343 11.33 348 11.47 358 23.65 Hunan 512 16.89 517 17.06 525 34.62 Neimenggu 112 3.68 113 3.74 123 8.10 Guangxi 344 11.36 350 11.53 357 23.57 Chongqing 231 7.62 230 7.6 242 15.96 Sichuan 805 26.56 806 26.61 876 57.81 Guizhou 291 9.59 294 9.71 283 18.65 Yunnan 303 10.01 310 10.25 331 21.87 Xizang 16 0.54 17 0.57 19 1.22 Shanxi 238 7.85 240 7.92 255 16.84 Gansu 183 6.03 185 6.11 181 11.93 Qinghai 28 0.94 29 0.96 28 1.84 Ningxia 30 0.98 31 1.01 28 1.87 Xinjiang 104 3.45 110 3.63 118 7.81 Data source: analyzing data of China Statistical Yearbook 2015. 680
Table 3. Structure of s and from 2009 to 2014. Year item Central government Amount (hundred Proportion Local government Amount (hundred Proportion State (hundred 2009 2010 2011 2012 2013 2014 35,915.71 52 32,602.59 48 68,518.30 15,255.79 20 61,044.14 80 76,299.93 42,488.47 51 89,874.16 49 83,101.51 15,989.73 18 73,884.43 82 89,874.16 51,327.32 49 52,547.11 51 103,874.43 16,514.11 15 92,733.68 85 109,247.79 56,175.23 48 61,078.29 52 117,253.52 18,764.63 15 107,188.34 85 125,952.97 60,198.48 47 69,011.16 53 129,209.64 20,471.76 15 119,740.34 85 140,212.10 64,493.45 46 75,876.58 54 140,370.03 22,570.07 15 129,215.49 85 151,785.56 Data source: analyzing data of China Statistical Yearbook 2015. subsidy amount of local government can t be lower than 30 yuan per person per year. What s more, in eastern areas, local governments supply 50 percent of subsidy (55 yuan per person per month) based on the regulation in the link of distribution, while none in the Midwestern areas. Eligible age is between 16 and 59. Insured rural residents start to get the pension at the age of 60 years old. This paper will calculate minimum subsidy amount of local governments in the situation of full coverage of eligible rural residents. (Without regarding to the following situation: local governments may choose proper encouragement in high payment level which cannot be quantified; Local governments may provide beneficiary contribution or increase subsidy for disadvantaged group such as rural severe disabled people). On the basis of the following situation: rural population in different areas between 16 and 59 years old in the year of 2009-2014; rural population over 60 years old; the document rules the situation of full coverage of eligible rural residents; Minimum subsidy amount of local government in eastern areas = rural population between 16 and 59 years old in eastern areas 30 + population of the rural residents over 60-year-old in eastern regions 55 50% 12; Minimum subsidy amount of local government in 681
midwestern areas = rural population between 16 and 59 years old in midwestern areas 30, we can calculate minimum subsidy amount of local governments in eastern regions and minwestern regions. As shown in Table 4 and Table 5. Totally, burden of local governments maintain lower than 10 percent. The stress is mainly from Incompatibility in economic development and capacity in the rural areas, so some poor areas are under tremendous pressure. Specifically speaking, we will focus on Cross-sectional data in 2014. Shanghai is among the highest in eastern area, the minimum subsidy amount of local government account Table 4. Minimum subsidy amount of local governments in eastern regions in 2009-2014. Year 2009 2010 2011 income income income Beijing 9.969 0.491 9.822 0.417 9.963 0.331 Tianjin 9.612 1.169 9.468 0.886 9.393 0.646 Hebei 141.141 13.226 142.389 10.691 140.415 8.080 Liaoning 61.368 3.857 59.109 2.948 56.166 2.125 Shanghai 8.982 0.354 8.766 0.305 8.943 0.261 Jiangsu 123.291 3.819 110.250 2.702 106.908 2.076 Zhejiang 79.278 3.700 74.583 2.859 73.488 2.332 Fujian 58.791 6.305 56.562 4.912 55.653 3.706 Shandong 174.213 7.924 171.642 6.243 168.168 4.866 Guangdong 132.597 3.633 126.234 2.795 125.763 2.280 Hainan 19.415 10.893 18.686 6.896 16.577 4.874 Year 2012 2013 2014 income Beijing 10.209 0.308 10.347 0.283 12.75 0.317 Tianjin 9.282 0.527 9.423 0.453 13.72 0.574 Hebei 138.159 6.629 135.513 5.903 161.75 6.611 Liaoning 53.724 2.387 52.458 1.569 75.71 2.371 Shanghai 9.081 0.243 8.937 0.217 11.72 0.256 Jiangsu 104.067 1.776 101.157 1.540 141.84 1.961 Zhejiang 71.895 2.089 70.551 1.858 88.24 2.141 Fujian 54.027 3.042 52.833 2.493 56.97 2.412 Shandong 163.845 4.036 160.056 3.510 216.90 4.315 Guangdong 123.399 1.981 122.571 1.731 141.26 1.752 Hainan 16.501 4.030 17.048 3.544 16.29 2.934 682
Table 5. Minimum subsidy amount of local governments in midwestern regions in 2009-2014. Year 2009 2010 2011 Shanxi 48.133 5.973 51.281 5.289 50.036 4.124 Jilin 29.801 3.502 30.377 2.839 29.806 2.197 Heilongjiang 33.259 6.828 35.292 5.858 35.452 4.170 Anhui 44.285 6.902 46.946 6.213 46.162 4.628 Jiangxi 92.314 10.686 93.753 8.157 91.161 6.229 Henan 65.478 11.264 68.927 8.858 67.444 6.402 Hubei 153.684 13.648 159.725 11.563 154.399 8.968 Hunan 80.326 9.858 79.559 7.868 76.770 5.028 Neimenggu 94.629 11.164 102.866 9.510 100.211 6.606 Guangxi 76.764 12.362 76.383 9.894 74.806 7.893 Chongqing 35.990 5.493 37.418 3.930 36.337 2.441 Sichuan 130.462 11.107 132.883 8.509 129.602 6.338 Guizhou 64.490 15.485 63.597 11.916 62.435 8.076 Yunnan 78.454 11.236 82.983 9.525 81.005 7.290 Xizang 5.981 19.877 6.407 17.481 6.476 11.826 Shanxi 54.764 7.448 55.948 5.839 54.603 3.640 Gansu 43.271 15.098 45.151 12.770 44.612 9.911 Qinghai 8.425 9.603 8.588 7.792 8.469 5.578 Ningxia 8.763 7.854 9.113 5.935 8.884 4.038 Xinjiang 33.753 8.682 34.381 6.868 34.511 4.790 Year 2012 2013 2014 Shanxi 48.624 3.207 47.553 2.795 31.98 1.757 Jilin 29.064 1.872 28.471 1.654 19.36 1.050 Heilongjiang 35.169 3.378 34.795 3.007 23.90 1.986 Anhui 45.640 3.924 45.123 3.532 31.49 2.420 Jiangxi 88.517 4.938 86.822 4.184 54.91 2.475 Henan 65.310 4.760 63.846 3.938 39.19 2.083 Hubei 149.600 7.332 146.083 6.048 90.02 3.286 Hunan 74.234 4.072 72.848 3.325 47.09 1.834 Neimenggu 97.855 5.491 96.155 4.735 59.92 2.648 Guangxi 73.046 6.264 71.909 5.458 43.57 3.064 683
Continued Chongqing 35.003 2.055 34.160 2.017 21.13 1.099 Sichuan 126.007 5.204 123.356 4.431 75.54 2.468 Guizhou 61.221 6.037 60.118 4.983 35.78 2.618 Yunnan 78.129 5.839 77.018 4.780 49.18 2.896 Xizang 6.575 7.594 6.572 6.917 4.08 3.286 Shanxi 51.828 3.238 50.618 2.895 33.02 1.747 Gansu 43.623 8.383 42.693 7.030 27.94 4.154 Qinghai 8.316 4.461 8.229 3.676 5.41 2.150 Ningxia 8.813 3.339 8.671 2.812 5.58 1.643 Xinjiang 34.561 3.802 34.712 3.076 22.10 1.723 for 0.256 percent of local income, the highest province is Hebei account for 6.611 percent. The average is of about 2.331 percent. Shandong is live with higher burden about 4.315 percent. In the period from 2009-2014, the share of local income accounted for by subsidy amount, has been steadily shrinking since 2009. For specified amount, it s pumped up a little bit. It is speculated that there is a significant improvement in local governments income. In midwestern areas, Cross-sectional data in 2014 shows us, Neimenggu got the minimum subsidy amount of local government accounting for 1.050 percent of local income, the highest province is Gansu about 6.611 percent. The average is about 2.319 percent. Xizang (3.286%), Henan (3.286%) and Guangxi (3.064%) province are high-pressured as well. It follows that, though central government has made a priority for Midwestern areas, there are higher pressures in Midwestern areas than that in eastern areas. Moreover, the eastern provinces with large agricultural population such as Hebei, Shandong, Fujian also bear heavy burdens. However, those provinces always have decent. It s not that so hard for local governments to fund. 4. Conclusion All in all, whether eastern areas or midwestern areas, the Steady economic growth leads governments withstand the subsidy pressure of the new rural endowment insurance. Moreover, Long-term supply system of the new rural endowment insurance needs combined action of central government and local governments. On the one side, based on the rural condition, governments should establish more reasonable sharing of the mechanism and upgrade management of the new rural endowment insurance. On the other side, central government plays a leading part, not just easing the pressure at the local level with more responsibility, but balancing the differentiation of regional subsidy pressure with transferring paying system appropriately. References [1] Mihong and Wangpeng (2010) Empirical Research on Institutional Pattern of the New Ru- 684
ral Endowment Insurance and Investment. China Social Security, 6, 23-25. [2] Tiebout, C. (1956) A Pure Theory of Local Expenditure. Journal of Political Economy, 64, 5. http://dx.doi.org/10.1086/257839 [3] Zhao, J.G. and Hai, L. (2014) Research on Financing Responsibility and Risk-Sharing System of Government Subsidies for the New Rural Endowment Insurance Based on Horizontal Public Service Balance Performances Analysis. Macroeconomic Studies, 7, 10-20. [4] Cao, X.B. and Liu, Q.Q. (2011) Analysis on Support Capability of Rural Social Endowment Insurance. China Population Resources and Environment, No. 10. [5] Gong, X.X. (2011) Research on Establishing Support Capability of the New Rural Social Endowment Insurance. Public Finance Research, No. 8. Submit or recommend next manuscript to SCIRP and we will provide best service for you: Accepting pre-submission inquiries through Email, Facebook, LinkedIn, Twitter, etc. A wide selection of journals (inclusive of 9 subjects, more than 200 journals) Providing 24-hour high-quality service User-friendly online submission system Fair and swift peer-review system Efficient typesetting and proofreading procedure Display of the result of downloads and visits, as well as the number of cited articles Maximum dissemination of your research work Submit your manuscript at: http://papersubmission.scirp.org/ 685